Housebuilders State Common OAN Methodology will Undermine Northern Powerhouse

Business leaders from across the North have joined together to warn Government that its proposed revisions to national planning policy could undermine efforts to rebalance the economy through the Northern Powerhouse.

The key concern raised is that by using data from a period when the UK was still suffering from recession, the methodology will “lock in” low and inadequate levels of housing.

Among those organisations that have put their name to a letter sent to Northern Powerhouse Minister Jake Berry are the Home Builders Federation, Greater Manchester’s Housing the Powerhouse pressure group, Peel, Barratt, Taylor Wimpey, Jones Homes, Strategic Land Group, Harworth, HIMOR, Gladman and various Chambers of Commerce.

The same group has written to Government previously, expressing concern that the draft housing need methodology will have the unintended consequence of reducing assessments of housing need in much of the North.

Although Berry responded to that, stating that the methodology sets a minimum “starting point” level of housing delivery and that local areas are expected to “go beyond” in return for receiving more housing-related powers and funding, the industry is concerned that in practice, that will not happen. They fear that local authorities will have licence to do the bare minimum, leaving housing growth to trail commercial expansion. It is noted that some authorities are already looking to “duck their obligations”.

Planner Turley was commissioned to compare the effects of the proposed standard method with requirements set out in the Northern Powerhouse Independent Economic Review, concluding that housing delivery in accordance with the proposed standard method would not achieve the “business as usual” conditions assumed by NPIER, let alone the accelerated growth scenario on which the Northern Powerhouse relies. The letter states that “the use of backwards-looking, trend-based projections is fundamentally at odds with the Northern Powerhouse”.

Essentially, this is a challenge to Government on how serious it is about rebalancing the economy. Referring to the NPIER, Turley’s report said that if the North continues under “business as usual” conditions then its economy could be expected to grow by approximately 700,000 jobs by 2050 – but in the NPIER’s “transformational growth scenario’ this would be 855,000 jobs – 530,000 of them in the 2020-2040 period.

Turley said that under the proposed standard method, by 2040 there would potentially be a gap of 1.24m people not being planned for, translating into approximately 570,000 households across the North – this suggests, it said, that an additional 23,000 households will annually need homes but would not be captured if planning only to meet the ‘minimum’ need.

The consultancy said that the construction of these homes would itself represent an economic catalyst, contributing to rather than detracting from economic rebalancing. To provide for these households, Local Plans would need to plan for at least 61,000 homes per year to 2040 as a minimum – a total it described as “a significant ‘step-up’ from the Government’s implied minimum need of 46,000 homes per year.

The letter identifies the NPPF consultation as “a unique opportunity to meet Government national housing targets and rebalance the national economy” by making a “simple adjustment to the housing need methodology and strengthening the link between economic ambitions for growth and assessments of housing need”.

In the letter, Rob Loughenbury of Lexington Communications, the author on behalf of the various signatories, stated: “Our main concern regarding the methodology is that whilst it boosts the housing requirement in the South – a boost that is necessary – it reduces it in the North.

“It does this because it relies on data from a short recessionary period that skewed economic growth to the South. This concern is compounded because the methodology does not hardwire economic growth strategy into assessments of housing need. Instead, it is left to the discretion of LPAs whether to link their stated economic ambitions to their housing plans.”

The letter continues: “We estimate that fully meeting the housing needs of the North, under the accelerated growth scenario, would require an uplift from the OAN methodology minimum starting point of some 30-40%. We predict that very few, in any, local authorities will rise to this challenge.”

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